We now have the Minutes of the August 1, 2012 FOMC meeting, and the long and short of the matter is that more Federal Reserve officials are getting on board for more quantitative easing measures. This will be reviewed closely by economists and Federal Reserve watchers as it is the last real glimpse of Ben Bernanke’s mind ahead of the Jackson Hole Economic Symposium which takes place August 30 to September 1.
The statement contained the phrase “The FOMC sees exceptionally low interest rates to continue through at least the end of 2014.” It further stated, “The Committee will closely monitor incoming information on economic and financial developments and will provide additional accommodation as needed to promote a stronger economic recovery and sustained improvement in labor market conditions in a context of price stability.”
Som basic notes were that more easing seems likely as more officials saw more easing necessary fairly soon. There is a base for new asset purchases and the belief is that more easing might help employment. The FOMC expects growth to remain moderate as some officials have lowered their forward expectations. The FOMC also sees uneasiness from the Eurozone and the coming policy woes of the U.S. via that coming fiscal cliff.
As a reminder, Fed Chairman Ben Bernanke speaks on Friday, August 31, 2012 at 10:00 AM EST and all eyes will be on him then.
JON C. OGG
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